I'm the founder of the blog Capital Gains and Games. I moved to DC after getting a graduate degree in public policy from the University of California, Berkeley and have been involved with the federal budget and congressional budget process throughout my entire career. In addition to being one of the few people who has served on the staffs of the House and Senate Budget Committees, I'm the author of The Guide to the Federal Budget, which was published annually from 1982 to 2000 and was one of the most-assigned texts on the topic. I founded and edited Federal Budget Report, a newsletter that was published for almost two decades. I've also written weekly columns on the budget for NationalJournal.com and Roll Call. I'm currently an executive vice president at Qorvis MSLGROUP, where I work closely with financial services clients. I frequently speak on federal taxes and spending.

Wall Street Likely To Fail On House Budget

At a time when federal budget happenings are few and far between and those that do occur are just not that important, there were two events late last week that should be noted.

The first was that, counter to my expectations and what I had been hearing, the House looks like it’s going to move ahead with a fiscal 2015 congressional budget resolution.

At least that’s what Majority Leader Eric Cantor (R-VA) announced last Friday when he released a statement saying the House will debate (and presumably pass) a budget resolution in early April.

I still have s serious doubts about the ability of House Republicans to adopt a budget with the reductions in Medicare, Social Security and Medicare that will be needed to eliminate the deficit in 10 years while keeping to the appropriations caps agreed to in December, which is what Cantor said it would do. But for now I’m going to assume that Cantor and House Budget Committee Chairman Paul Ryan (R-WI) have polled the GOP caucus and know for sure that the votes on the new budget will be there when the debate takes place. For now, therefore, let’s just plan on that happening.

The second was that, as reported in The Hill, Wall Street somehow is planning to make it clear this year that the bank tax included in the tax reform plan introduced several weeks ago by House Ways and Means Committee Chairman Dave Camp (R-MI) has little support and must be dropped.

The opposition to the Camp proposal from the financial world on the possibility of increased taxes on big banks is hardly a shock. Indeed, what would have been surprising is anything less than massive opposition.

What is surprising, however, is that I’m told that Wall Street may be planning to use to budget resolution Cantor says the House will consider in April (see above) to demonstrate as conclusively as possible that the Camp plan is not acceptable. The reason? It’s the only tax-related legislation that will be considered this year.

There is a huge problem with this strategy, however: It’s destined to fail.

Budget resolutions are very strange documents. Because of the politics that existed in 1974 when the Congressional Budget Resolution was enacted, rather than actually increasing or decreasing spending or revenues, budget resolutions simply assume that spending or revenues will be increased or decreased. In other words, budget resolutions never make changes in the underlying laws.

Even more important, however, budget resolutions do not deal with individual spending and taxing provisions like the Camp plan. Instead, they include an estimate for total spending and revenues. And even when the budget committee says something like the Camp plan was not assumed, there’s nothing to stop it from being considered as long as aggregate revenue stays the same.

Finally, budget resolutions at best are very weak indications of congressional preferences. Even statements in a budget resolution that purport to represent the sense of the House on a particular issue are usually considered to be just a pacifier to a particular industry or interest group, are almost immediately forgotten after the bill is passed and are seldom, if ever, taken seriously.

The grand slam for Wall Street would be to get Ryan, who presumably will replace Camp next year as chairman of the House Ways and Means Committee, to make a definitive statement at some point in the budget resolution debate that he is against the Camp plan. But that’s unlikely given that Ryan supposedly wants to keep tax reform out of that debate. The most he’s likely to do is to say that the resolution assumes that revenue-neutral tax reform will happen without saying what will be included.

This leaves Wall Street with a number of less-than-satisfying choices.

It could, for example, try to get sense of the House language included against the Camp plan. That will simply be a free vote for most members of Congress, however and essentially will be meaningless.

The financial industry could try to get the budget committee to include language in the report that will be written to explain the budget resolution that it would prefer the Camp plan never be discussed again. That too will be symbolic and not controlling.

Wall Street could also attempt to get House members to have some type of colloquy on the floor during the budget resolution debate about the impropriety of the Camp plan. That would create legislative history but would not necessarily be instructive.

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